ACCT 3001 FINAL EXAM 2025
QUESTIONS AND ANSWERS
To calculate earnings per share, net income
-is divided by the weighted average number of common shares outstanding.
-is divided by the ending common shares outstanding.
-minus preferred dividends is divided by the weighted average number of common shares
outstanding.
-minus preferred dividends is divided by the ending common shares outstanding. -
ANS minus preferred dividends is divided by the weighted average number of common
shares outstanding.
Which of the following is not included in comprehensive income?
-unrealized holding gains
-investments by owners
-losses on disposal of assets
-dividend revenue - ANS -investments by owners
Which of the following can be defined as gains and losses that bypass net income but affect
stockholders' equity?
-prior period income
-unusual gains and losses
-comprehensive income
-other comprehensive income - ANS -other comprehensive income
1 @COPYRIGHT THEBRIGHT 2025/2026
,Cash inflows as a result of a company's central operations are classified as
revenues.
losses.
expenses.
gains. - ANS revenues
Discontinued operations are reported in the income statement because of a concept called the
-current operating performance concept.
-prior period adjustment concept.
-phase-out period concept.
-modified all-inclusive concept. - ANS -modified all-inclusive concept.
_______________ retained earnings can only be used for specific purposes, whereas
_________ retained earnings can be used as needed by the company. - ANS appropriated,
free
Why do companies sometimes use earnings management?
-To offer new stock options at higher or lower prices than market value.
-To temporarily decrease expenses in order to save money for expansion.
-To temporarily increase revenues in order to pay back debt.
-To beat Wall Street's expectations so that the value of the company's stock increases. -
ANS -To beat Wall Street's expectations so that the value of the company's stock increases.
What is another name for the one statement approach?
-the term income statement
-the net income statement
-the statement of converging income
-the statement of comprehensive income - ANS -the statement of comprehensive income
2 @COPYRIGHT THEBRIGHT 2025/2026
, Which of the following is an example of a significant accounting policy that should be disclosed
on the financial statements?
-Yates International has calculated a fair market value of $2.6 million for the bonds and stocks
they have purchased from other entities.
-Marsh Enterprises signed a lease agreement for an office building at a cost of $1,500 per
month for five years.
-Owen Industries has a tax operating-loss carryforward of $98,524.
-Trujillo Chemicals uses the double-declining-balance method of depreciation for major assets. -
ANS -Trujillo Chemicals uses the double-declining-balance method of depreciation for major
assets.
format where the left side shows the assets whereas the right side shows the liabilities and
stockholders' equity sections. This requires two facing pages to be used - ANS Account
format
form where the sections are list assets listed first, and underneath the assets, the liabilities and
stockholders' equity sections follow. - ANS report format
Which disclosure technique is used to disclose the most lengthy and detailed information?
-note
-parenthetical explanation
-cross-reference
-supporting schedule - ANS -supporting schedule
short statement about the asset or liability located at the end of the balance sheet. -
ANS note
used when there is a relationship between a couple of accounts with "see the respective
accounts" noted directly in the financial statement. - ANS cross-reference
3 @COPYRIGHT THEBRIGHT 2025/2026
QUESTIONS AND ANSWERS
To calculate earnings per share, net income
-is divided by the weighted average number of common shares outstanding.
-is divided by the ending common shares outstanding.
-minus preferred dividends is divided by the weighted average number of common shares
outstanding.
-minus preferred dividends is divided by the ending common shares outstanding. -
ANS minus preferred dividends is divided by the weighted average number of common
shares outstanding.
Which of the following is not included in comprehensive income?
-unrealized holding gains
-investments by owners
-losses on disposal of assets
-dividend revenue - ANS -investments by owners
Which of the following can be defined as gains and losses that bypass net income but affect
stockholders' equity?
-prior period income
-unusual gains and losses
-comprehensive income
-other comprehensive income - ANS -other comprehensive income
1 @COPYRIGHT THEBRIGHT 2025/2026
,Cash inflows as a result of a company's central operations are classified as
revenues.
losses.
expenses.
gains. - ANS revenues
Discontinued operations are reported in the income statement because of a concept called the
-current operating performance concept.
-prior period adjustment concept.
-phase-out period concept.
-modified all-inclusive concept. - ANS -modified all-inclusive concept.
_______________ retained earnings can only be used for specific purposes, whereas
_________ retained earnings can be used as needed by the company. - ANS appropriated,
free
Why do companies sometimes use earnings management?
-To offer new stock options at higher or lower prices than market value.
-To temporarily decrease expenses in order to save money for expansion.
-To temporarily increase revenues in order to pay back debt.
-To beat Wall Street's expectations so that the value of the company's stock increases. -
ANS -To beat Wall Street's expectations so that the value of the company's stock increases.
What is another name for the one statement approach?
-the term income statement
-the net income statement
-the statement of converging income
-the statement of comprehensive income - ANS -the statement of comprehensive income
2 @COPYRIGHT THEBRIGHT 2025/2026
, Which of the following is an example of a significant accounting policy that should be disclosed
on the financial statements?
-Yates International has calculated a fair market value of $2.6 million for the bonds and stocks
they have purchased from other entities.
-Marsh Enterprises signed a lease agreement for an office building at a cost of $1,500 per
month for five years.
-Owen Industries has a tax operating-loss carryforward of $98,524.
-Trujillo Chemicals uses the double-declining-balance method of depreciation for major assets. -
ANS -Trujillo Chemicals uses the double-declining-balance method of depreciation for major
assets.
format where the left side shows the assets whereas the right side shows the liabilities and
stockholders' equity sections. This requires two facing pages to be used - ANS Account
format
form where the sections are list assets listed first, and underneath the assets, the liabilities and
stockholders' equity sections follow. - ANS report format
Which disclosure technique is used to disclose the most lengthy and detailed information?
-note
-parenthetical explanation
-cross-reference
-supporting schedule - ANS -supporting schedule
short statement about the asset or liability located at the end of the balance sheet. -
ANS note
used when there is a relationship between a couple of accounts with "see the respective
accounts" noted directly in the financial statement. - ANS cross-reference
3 @COPYRIGHT THEBRIGHT 2025/2026
